From Site Selection magazine, September 2000 M A N A G E M E N T     S T R A T E G Y

The 2nd Quarter 2000 Johnson Controls Office Occupancy Costs Index CONTINUED Johnson Controls International Office Costs Index [See Chart B] The Johnson Controls International Office Costs Index is based on a detailed model of a medium grade air-conditioned office building, which operates reasonably efficiently with no unusually high service standards or demands. The building is 160,000 rentable square feet in size, and houses 750 occupants working between 8am and 6pm 5 days a week. This model is used to compare the cost variance for each country from the average. Figures reported reflect input costs at 2nd Quarter 2000. The average is calculated using costs for each of the following facility services which must normally be provided to ensure a productive working environment • maintenance, cleaning, security, utilities, reception, communications, reprographics, internal moves, stationery, and post room services. These are then weighted to take account of the relative significance each one has on the overall service. For example, a fluctuation in maintenance costs will have a greater effect on overall costs than reception services. ANALYSIS OF THE INDEX Key point countries • Denmark has the highest overall costs • The Netherlands has the lowest overall costs • Spain has the second highest costs • The UK has the second lowest costs • Germany has made a significant comparative improvement Denmark Denmark is the most expensive country in the Index overall. If utilities and cleaning were not included, Denmark would be one of the lower cost countries. Denmark is the most expensive country in the areas of cleaning and internal moves, and is also very high for utilities. Costs have risen overall by approximately 2% over the last period. France France is now the third lowest cost country in the index, its relative position to Sweden having improved again over the last 6 months. Germany Germany has shown a significant improvement in its relative positioning, mostly caused by costs being held whilst others are rising, the effects of exchange rate changes outside the 'euroland' area, and also reductions in communications costs through market competition. It is still the most expensive country in the areas of security and external landscaping, but is lowest for reprographics and stationery. Italy Italy's relative position has deteriorated over the last six months, now being higher than average. The Netherlands The Netherlands is still the lowest cost overall in the index. Costs have risen for a number of services by approximately 3%, but its relative positioning against the UK has been protected by the euro's exchange rate weakness. It is the lowest cost country for communications and for property operations and office services overall. Spain Spanish costs have continued to be fairly static over the last period. It is still the most expensive for utilities, as well as reprographics and now communications. It is the lowest cost for seven other categories, though, where labor costs are significant. Sweden Sweden's relative position has deteriorated, it now being the fourth lowest cost. Most labour costs have risen by approximately 3%, although in some sectors this has been significantly higher due to skills shortages. Sweden has the highest cost for mail room. United Kingdom The UK is now the second lowest country in the Index, exchange rates relative to euroland having a significant effect. Despite this it has the lowest cost for maintenance. USA The relative positioning of the USA has improved again over the last six months, and it is now at -2% below the group average. Cost increases have generally been more modest than those experienced in other countries, which has mitigated any exchange rate effect. It is the most expensive for maintenance, reception and stationery, but continued reductions in electricity costs have reinforced its position as the lowest for utilities. How Can Johnson Controls Provide This Information? Johnson Controls is one of the largest facility management companies in the world. It operates in more than 500 locations in 40 countries and employs over 18,000 staff. By building on this strength, it has developed International Performance Management (IPM), a process to accurately measure and compare the performance of facilities, not only from a cost perspective, but perhaps more significantly in terms of service efficiency and effectiveness. At the heart of IPM is a sophisticated knowledge-base with information stored on thousands of buildings across the globe, occupying more than 500 million square feet. This database can be accessed and used by Johnson Controls managers and professionals around the world. Information for the USA Indices, as well as similar ones in the UK and Europe, is drawn from the IPM database.

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